錢(qián)伯斯發(fā)布《2023年合資企業(yè)》全球法律實(shí)務(wù)指南 -中國(guó)章節(jié)

CHAMBERSGLOBALPRACTICEGUIDES

JointVentures

2023

Definitivegloballawguidesoffering

comparativeanalysisfromtop-rankedlawyers

China:Law&Practice

JinXiong,HaiLuoandYafeiZhan

King&WoodMallesons

CHINA

LawandPractice

Contributedby:

JinXiong,HaiLuoandYafeiZhan

King&WoodMallesons

Contents

1.MarketTrendsp.6

1.1RecentChangesp.6

1.2KeyIndustriesp.6

2.TypesofJointVenture(JV)p.7

2.1JVVehiclesp.7

2.2ChoiceofJVVehiclep.8

3.Regulationp.8

3.1Regulatorsp.8

3.2AMLp.9

3.3RestrictionsandNationalSecurityConsiderationsp.10

3.4CompetitionConsiderationsp.10

3.5ListedPartyParticipantsp.11

3.6Control/OwnershipDisclosureRequirementsp.11

4.LegalDevelopmentsp.11

4.1SignificantRecentDecisionsorRegulatoryDevelopmentsp.11

5.NegotiatingtheTermsp.12

5.1NegotiationDocumentationp.12

5.2DisclosureRequirementsandTimingp.13

5.3Set-Upp.13

6.TheJVAgreementp.14

6.1AgreementDocumentationp.14

6.2Decision-Makingp.14

6.3Fundingp.15

6.4Deadlocksp.15

6.5OtherDocumentationp.16

7.TheJVBoardp.17

7.1BoardStructurep.17

7.2Directors’andBoard’sDutiesandFunctionsp.17

7.3ConflictsofInterestp.17

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8.IntellectualPropertyandtheJVp.18

8.1KeyIPIssuesp.18

8.2LicensingandAssignmentp.18

9.ESGandtheJVp.19

9.1ESGRegulationsandDevelopmentsAffectingJVsp.19

10.CompletionoftheJV’sPurpose,WindingUpandRedistributionofJVAssetsp.20

10.1TerminationofaJVp.20

10.2TransferringAssetsBetweenParticipantsp.21

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King&WoodMallesons(KWM)isaninter-

lawfirminChinaandgloballybyleadinglegal

nationallawfirmhead-quarteredinAsia,with

publications.Asaleadinglawfirmfoundedin

morethan3,000lawyersandanextensiveglob-

China,KWMprovidesitsclientswithunique

alnetworkof31internationaloffices.InChina,

perspectivesandmarketinsightonChina.The

thefirmhasnearly470partnersand1,900

alliancewithtopAustralianfirmMallesonsSte-

lawyerswith17officesinthemajorcommer-

phenJacquesin2011hassignificantlyliftedthe

cialcentresincludingBeijing,Shanghai,Shen-

combinedfirm’sandglobalserviceoffering,al-

zhen,Guangzhou,Haikou,Sanya,Hangzhou,

lowingittoprovideitsclientswithconsistent,

Suzhou,Nanjing,Qingdao,Jinan,Chengdu,

highquality,commerciallymindedandinno-

Chongqing,ZhuhaiandWuxiandChangchun.

vativelegalservicesunderonebrandfortheir

Thefirmisconsistentlyrankedasapremium

businessoperationsaroundtheworld.

Authors

JinXiongspecialisesincross-borderM&Atransactions,

foreigndirectinvestmentandprojects.Inhismorethan20yearsasatransactionlawyer,

JinhasactedforawiderangeofclientsontheirtransactionsandinvestmentsinChinaandglobally,coveringprivateandpublicM&A,foreigndirectinvestment,strategic

alliancesandjointventures,andproject

investments.Hissectorexposureincludes

conventionalandrenewableenergy,mining,

infrastructure,agriculture,consumer,and

advancedmanufacturing.Playingalead

counselroleinthosetransactions,Jinhas

earnedareputationforhisskillsinhandling

English-Chinesedocumentationandassistingclientsinbilingualnegotiations.Hehasbeen

consistentlyrecognisedandrankedbyleadingpublications,includingbyChambers.

HaiLuospecialisesincorporateandcross-borderM&A

transactionswithaproventrackrecordofassistingdifferent

typesofclientsincarryingoutinvestmentsandtransactions

acrossjurisdictionsinabilingualcontext,

includingChineseoutboundinvestmentsandforeigndirectinvestmentsinthePRC,joint

venturesarrangements,andproject

investment.MrLuohasparticularexperienceintheenergyandnaturalresourcessectorsas

wellasinadvancedmanufacturing

technologies,andhehashelpedprovidelegalsolutionstoclientsdealingwithcomplex

regulatoryclearanceissuesassociatedwith

theirM&Atransactions,including,IPlicensing/

technologysupport,consortiumarrangements,supplyanddistributionarrangements,R&W

insurance,escrowarrangementsandLNGsaleandpurchase.

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YafeiZhanfocusesoncross-

borderM&Atransactions,

foreigndirectinvestmentand

projects,withexperiencein

representingChineseclientsin

connectionwithcross-border

M&A,jointventuresandprojectinvestments

(includingoilandgas,renewableenergyand

miningprojects).PriortojoiningKWM,Yafei

workedforacommerciallawfirminSydney,

Australia.Yafeiisqualifiedtopracticeinboth

ChinaandAustraliaandhasbeenadmittedas

asolicitoroftheSupremeCourtofNewSouth

WalesinAustralia.

King&WoodMallesons

28thFloor,ChinaResourcesTower

2666KeyuanSouthRoad

NanshanDistrict,Shenzhen

PRC

Tel:+8618010171806

Email:xiongjin@

Web:/cn/en/people/xiong-jin.html

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1.MarketTrends

1.1RecentChanges

Thecompoundedeffectofthepandemic,lock-downsandincreasedgeopoliticaltensionshavesloweddowntheChineseeconomy.Overallfor-eigndirectinvestment(FDI)flowingintoChinawassignificantlyaffected.Notwithstandingthis,therehasbeenanotableincreaseinFDIfromcertaincountries(GermanyandcountriesfromtheMiddleEastinparticular)andincertainsectors,includingmanufacturing,hi-tech,auto(electricvehicles(EVs)inparticular),andpetro-chemicals.

In2022,theoverallChina(domestic)M&Amar-ketfelltoitslowestlevelsince2014atUSD486billion(source:ChinaM&A2022reviewand2023outlookissuedbyPwCChina),a20%decreasefrom2021levels.Thedeclinewouldhavebeenlargerbutforanumberofmegadealsbystate-ownedenterprises(SOEs)aspartoftheirmixedownershipreform.ThedomesticM&Amarketwasprimarilydrivenbygovernmentpolicies,withastrongfocusonsupplychainintegration,industrialupgrades,mixedownershipreform,anddistressedassetsdisposal.

CapitalraisingandinvestmentbyPEinstitutionswerenotimmunefromthesetrends,coincidingwithalessactiveIPOmarket.Inthefirsthalfof2023,theoverallequityinvestmentmarketcon-tinuedthedownwardtrend(source:ChinaVC/PEMarketReview2023H1issuedbyZero2IPOResearch).

WhilstthepolicesonChinaoutboundinvest-mentmanagedtoremainunchanged,overallChinesecapitaloutflowcontinuestodecrease,exceptforinvestmentincertainsectorsinclud-ingtraditionalandrenewableenergy,technol-ogy,advancedmanufacturingandhealthcare.

Asaresultofglobalsupplychainrestructur-ing,ChineseinvestorshavebeenshiftingtheirinvestmentsintoMexico,SouthEastAsia,cen-tralEuropeandLatinAmerica,mostlyintheformofgreenfieldinvestment(insteadofM&A).

1.2KeyIndustries

Certainsectorshavewitnessedincreasedactiv-itybyforeigninvestors:

?Newenergyvehicle(NEV)andbatterysec-

tor–foreigninvestorscontinuetohavea

stronginterestinChina’sNEVandbattery

industry,evidentbytheinternationalauto-

mobilemanufacturers’follow-upinvestment(overUSD10billion)onexpandingtheirNEVrelatedbusinessinChinaduring2022.The

growingmarketdemandforelectricvehicles(EV),advancedbatterytechnology,andthetransitiontowardscleanerandmoresustain-

abletransportationhavebeendrivingthe

surgeofforeigninvestmentinthesector.

Notably,well-knownGermancarmanufactur-ersannouncedheadlinedealsintandem,bymaking(strategic)investmentandformjointventureswithleadingChineseEVcompaniesandEVbatteryplayers.ChineseEVexportshavealsorecordedphenomenalgrowth.

?Hydrogenenergysector–withincreasing

globalfocusonde-carbonisationandsearch-ingforcleanenergyalternatives,investmentinhydrogenenergyhasgainedmomentum

inChinatoo,attractingforeigninvestmentinhydrogenproduction,storage,andapplica-tionthroughoutthevaluechain.

?Petroleumandpetrochemicals–despitethe

renewableenergypushandgrowthinthe

sector,thedemandforpetroleum,petro-

chemicals,downstreamrefining,andliquefiednaturalgas(LNG)remainsrobustinChina,

notabletransactionsincludinglandmark

jointventuredealssuchastheSino-Aramco

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HuajinprojectandSinopec-INEOSseriesJVprojectsinChina.

China’scommitmentregardingtransitioningtowardscleanerenergiesandreducingdepend-enceonfossilfuelshasplayedanimportantroleinattractingforeigninvestmentinthosesectors.GeopoliticalfactorsincludingtheRussia-UkrainewarhavedisruptedglobalenergysuppliesandpromptedChinatodiversifyitsenergysourc-esandestablishmoresecuresupplychains,attractinginvestmentsinenergysectorsthatprovidealternativeandsustainableenergysolu-tions.China’stechnologicaladvantagesintheareasincludingbatterymanufacturing,hydrogenproduction,andelectricvehicledevelopmenthavealsopositionedthecountryasadesirabledestinationforforeigninvestment.

2.TypesofJointVenture(JV)

2.1JVVehicles

ThenewForeignInvestmentLaw(FIL)tookeffecton1January2020.Amongstothermat-ters,theFILrepealstheoldFDIlawandregu-lations.TheFILprovidesforafive-yeartransi-tionperiodwherebythoselegacyFDIstructures(EJVs(sino-foreignequityjointventures)andCJVs(co-operativejointventures))thatwereonlyavailableto(andlegallypermittedfor)for-eigninvestorsundertheoldregimemustnowadapttotheCompanyLawregimeandothersuitablestructures.Asaresult,foreigninves-torsarenowentitledtousethesamecorporatestructuresfortheirinvestmentsinChinaasChi-nese(domestic)investorsdo.

Generallyspeaking,foreigninvestorsandtheirChinesepartnershavethefollowing(limited)optionsfortheirjointventures:

?thelimitedliabilitycompany(LLC);

?theunincorporated(orcontractual)jointven-tureorstrategicalliance;or

?theproductionsharingcontract(onlyusedinupstreamoilandgasexploitationcollabora-tion).

Partnershipsandjointstockcompanies(JSCs)arerarelyused,duetotheirmorerigidandreg-ulatedgovernancestructure,jointandseveralliability(inthecaseofpartnerships)andhigherscrutinyandcomplianceburdens(inthecaseofJSCs).

LLCs

ChineseLLCstructuressharemanycommon-alitieswiththeequivalentstructuresinoffshorejurisdictions,including:

?clearlydefinedgovernancestructurebylaw(CompanyLaw);

?limitedliabilityofshareholdersandtheruleof“piercingthecorporateveil”rarelyappliedinpractice;

?fewerdisclosureandcompliancerequire-

ments,makingthemprivatetoshareholdersandeasiertoestablishandoperate;and

?unlesscontractedoutundertheby-laws,statuarypre-emptiverightsautomaticallyapplytoequitytransfersbyshareholders.

OnedifferencetonoteisthatshareholdersofChineseLLCsholdequityinterests(insteadofshares)inthecompany,andtheCompanyLawcurrentlydoesnotofferdifferentclassesofequi-ty(securities)makingChineseLLCsmuchlessflexibleandaccommodatingthantheiroffshoreequivalents.

UnincorporatedJVs

Unincorporatedjointventurestructures,whilstpopularinmanyoffshorejurisdictions(inpar-

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ticularforresourcesprojects)fortheirstructuralflexibilityandtaxefficiency,arerarelyusedforjointventuresinChina.Chinesepartnersappeartobegenerallylesscomfortablewithcomplicat-edjointventuredocumentation,andregulatorsgenerallypreferanincorporatedstructurethankstotheirclearlydefinedlegalfeatures(asamatterofstatuarylawandcourts’interpretations).

Foreigninvestorsshouldtakenoteoftherig-idnessandcertaingreyareasofChineseJVstructuresandhowthatmayaffecttheirbusi-nessobjectives.

2.2ChoiceofJVVehicle

Thankstothepreviouslegalrestrictions,for-eigninvestorswerelegallyrequiredtoformJVswiththeirChinapartnersiftheyweretoinvestintocertain“restricted”sectors,andtheirequityinterestswerecappedbylaw.Thisoldregimeisnowlargely(butnotcompletely)replacedbythenegativelistregimeintroducedbytheFIL(ie,noapprovalsrequiredorrestrictionsimposedunlessinthoselimitedsectorsassetoutonthelist;pleasereferto3.1RegulatorsforfurtherdetailoftheNegativeList).

Recentdealtrendsindicatethatforeigninves-torsprefertosetupJVsinChina,drivenprimar-ilybycommercialconsiderationssuchasfastaccesstowell-establishedbrandsanddistribu-tionchannels,supplyorvaluechainintegration,jointR&D,andquickexpansionofproductioncapacity.

3.Regulation

3.1Regulators

NationalandProvincialRegulators

Theprimaryregulators(includingtheircompe-tentprovincialandlocalcounterparts)forthe

establishmentandoperationsoftheJVincludethefollowing:

?TheStateAdministrationforMarketRegula-tion(SAMR),responsibleforsupervisionof

marketactivities,includingcompanyincorpo-rationandregistration;theSAMRisalsotheauthorityresponsibleforcompetition(anti-

trust)filings.

?TheMinistryofCommerce(MOFCOM),regu-latingdomesticandcross-bordereconomic

co-operation,includingmonitoringforeign

investmentthroughtheinformationreportingsystemestablishedundertheFIL;itwasthe

keyregulatorapprovinganyformofFDIundertheoldregime.

?TheNationalDevelopmentandReformCom-mission(NDRC),responsibleforformulating

andimplementinglong-termstrategies,plans,andpoliciesforeconomicandsocialdevel-

opment,includingapprovingmajorprojects

byreviewingeconomicandfeasibilitystudiesanddevelopmentplansandmonitoringthe

performanceoftheinvestmentactivities;bothdomesticinvestmentandFDIprojectsare

subjecttotheNDRC’sapprovalorverificationiftheyarecategorisedasmanufacturing/pro-ductionorinfrastructureinvestment(refertotheNegativeListcommentsbelow).

?TheStateAdministrationofForeignExchange(SAFE),theagencyresponsibleforsupervis-ingallforeignexchange-relatedactivities,andmonitoringinboundandoutboundcapital

flows,implementingregulationsforforeignexchangeadministrationsandmanaging

China’sforeignexchangereserves.

?TheMinistryofEcologyandEnvironment

(MEE),responsibleforecologicalenvironmen-talprotectionadministrationandsupervision.

JVentitiesmustobtainspeciallicencesorper-mitsfromrelevantregulatorsforcarryingout

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businessoperationsincertainindustries.Forinstance,foodproductionlicencesissuedbytheGeneralAdministrationofQualitySupervision,InspectionandQuarantine(AQSIQ)arerequiredforcarryingoutbusinessinthefoodproductionindustry.

KeyLegalisation

PrimarystatutoryprovisionswhichmaybecomerelevantforJVsinChinainclude:

?theForeignInvestmentLaw(FIL)andits

implementationrules,establishingthefunda-mentalframeworkregulatingforeigninvest-ment;

?theSpecialAdministrativeMeasures(Nega-tiveList)forForeignInvestmentAccess(2021edition,theNegativeListforForeignInvest-ment);onsectorsnotonthislist,theNega-

tiveListforMarketAccess(2022revision)willapplytobothdomesticandforeigninvestors(togetherwiththeNegativeListforForeign

Investment,collectivelyknownasthe“Nega-tiveList”);

?theCompanyLaw(2018revision);

?thePartnershipEnterpriseLaw(2006revi-

sion),whichgovernsunincorporatedJVswithpartnershipstructures;

?theAnti-MonopolyLaw(2022AML),estab-lishingtheChineseantitrust/competition

regime;

?theForeignExchangeAdministrationRegula-tions(2008revision)issuedbySAFE,regulat-ingforeignexchangetransactionsinChina;

and

?otherindustry-specificlicensingandpermit-tinglawsandregulationsastheymayapply,suchastheEnvironmentProtectionLaw

(2014revision),theLawonEnvironmentalImpactAssessment(2018revision)anditsimplementationrulesandtheConsumer’s

RightsandInterestsProtectionLaw(2013revision).

3.2AML

Theprimarylawsandregulationsregulatinganti-moneylaundering(AML)activitiesinclude:

?theAnti-MoneyLaunderingLaw;

?theCounter-TerrorismLaw;

?theCriminalLaw(Article191,moneylaunder-ingasacriminaloffence);and

?theAnti-TelecomandOnlineFraudLaw.

Theprimaryregulatorsinclude:

?thePeople’sBankofChina(PBOC),thepri-maryregulatorthatpromulgatesregulationsforallfinancialinstitutionsandcertainnon-

financialinstitutions(AMLreportingentities);

?theChineseBankingandInsuranceRegula-toryCommission(CBIRC);and

?theChineseSecuritiesRegulatoryCommis-sion(CSRC).

TheprimaryobligationsofAMLreportingenti-tiesinclude:

?carryingoutregularandon-goingduedili-

gence(KYCprocess)ontheircustomers,

includingre-identifyingtheircustomersuponchangesorintheeventofsuspicionsbeingraised;

?assessingandclassifyingAMLrisksaccord-ingtobusinessandcustomercharacteristics(eg,customercharacteristics,geographi-

calrisks,productsandservicesrisks,and

industrial/occupationalrisks)andmonitoringAMLriskclassificationsregularlyincluding

reassessmentuponchangesorintheeventofsuspicionsbeingraised;

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?retainingandmaintainingrecordsoftheir

customers’identityinformationandtransac-tions;and

?reportinginatimelymannertothePBOC

officeandAMLDataCentreanyrefusalto

providevalididentitycertificatesbyanycus-tomer,anysuspicioustransactionsortrans-actionsexceedingprescribedthresholds.

3.3RestrictionsandNationalSecurityConsiderations

TheNegativeListforForeignInvestmentspeci-fiesindustrialsectorswhereforeigninvestmentisprohibitedorotherwiserestricted,whichisupdatedfromtimetotime,withthelatestversiontakingeffectinJanuary2022(withrestrictionson31sectors,includingsensitivesectorssuchasdefence,telecommunications,andenergy).

TheMeasuresfortheSecurityReviewofFor-eignInvestments(NSRMeasures)implementedinDecember2020,empowerstheregulators(eg,theNDRC,MOFCOMandtheSAMR)tocarryoutreviewsonforeigninvestmentsthatmaypotentiallyimpactnationalsecurity.UndertheNSRMeasures,foreigninvestmentsinthefol-lowingtwocategoriesmustbeclearedpriortoclosingorimplementation:

?investmentintomilitary-relatedsectors

(regardlessofthepercentageofforeignown-ership);and

?investmentintosectorswhichconcern

nationalsecurity(suchasimportantenergyandresources,agriculturalproducts,infra-structureandtransportation,andkeytech-nologies)withactualordefactocontrolbyforeigninvestors.

TheUnreliableEntityListwasintroducedtorestrictco-operationbyChineseentitieswithforeignentitiesperceivedtobedetrimentalto

Chinesenationalinterestsorinviolationofnor-malmarketprinciples.Foreignentitiesonthelistmayfacevariousrestrictionsandconsequences,includingrestrictionsoninvestingordoingbusi-nessinChinaandlegalpenaltiesforbreaches.

3.4CompetitionConsiderations

ThefollowinglawsandregulationsestablishtheChineseantitrustregime:

?theAnti-MonopolyLaw(AML,asamendedin2022);

?theAnti-MonopolyReviewGuidancefor

ConcentrationsofUndertakings(asamendedin2018);

?theRulesoftheStateCouncilontheThresh-oldforConcentrationofUndertakingsFilings(asamendedin2018);and

?theRegulationstheReviewofConcentrationofUndertakings.

Anantitrustnotificationorfilingmustbemadefortransactionsthatconstituteconcentrationsandexceedstheturnoverthresholds.

TheconcentrationsforAMLpurposeinclude:

?mergersbetweenundertakings;

?acquiringcontrolofotherundertakings

throughtheacquisitionofequityinterestorassets;and

?acquiringcontrolofotherundertakings,or

theabilitytoexercisedecisiveinfluenceoverotherundertakings,bycontractorother

means.

Theturnoverthresholdsaremetifinthelastfinancialyeareither:

?theaggregateglobalturnoverofalltheunder-takingstotheconcentrationexceedsCNY10billionandeachofatleasttwooftheunder-

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takingstotheconcentrationhasaChineseturnoverofatleastCNY400million;or

?theaggregateChineseturnoverofallthe

undertakingstotheconcentrationexceedsCNY2billionandeachofatleasttwooftheundertakingstotheconcentrationhasaChi-neseturnoverofatleastCNY400million.

Theregulatorshavestep-inrightandcandemandtheconcernedundertakingstomakeafilingevenifthethresholdsarenotmet.

3.5ListedPartyParticipants

Listedcompaniesgenerallyusetheirsubsidiar-ies(includingnewlyestablishedSPVs)aspar-ticipantsinJVssuchthattheJVgovernancestructureanddecision-makingprocesswillnotbeencumberedbythelistingrulesandJSCstructure.Notwithstanding,transactionsbytheirJVsmaytriggerdisclosurebythelistedparentunderChineselistingrules.

Asageneralprinciple,listedcompaniesshouldmaketimelyannouncementsifamaterialtrans-actionhavingsignificantimpactontheirsharepriceoccurs,disclosingdetailsondealration-ale,status,andpotentialimpactandrisk.SuchmaterialtransactionsincludeformingJVsbythelistedcompaniesandinvestmentbytheJVcon-trolledbylistedcompanies.Ifamaterialtrans-actionexceedscertainmonetarythresholds,itmayrequireshareholders’approvals,oreventriggerthematerialassetrestructuring(MAR)process,wherebyprescribeddocumentsmustbesubmittedtothestockexchangeswherethecompaniesarelistedforsubstantivereviewandapproval.

Listedcompaniesmustalsocomplywithcon-tinuousdisclosureobligationsregardingtheirmaterialsubsidiaries/JVs(inparticularthosewithcontrol).Iflistedcompaniesdonothave

controloverthesubsidiaries/JVs,disclosureisonlyrequiredformaterialeventsthatmayhaveasignificantimpactonthelistedsecurities.

3.6Control/OwnershipDisclosureRequirements

TheFILintroducestheforeigninvestmentinfor-mationreportingsystem.Theforeigninvestmentinformationreportingsystemoperatesthroughthesameenterpriseregistrationsystemadmin-isteredbytheSAMR(includingitsprovincialandlocalcounterparts).Inpractice,foreigninves-torsandforeigninvestmententerprises(FIEs)donotneedtosubmitthesameinformationtoMOFCOMandtheSAMRseparately.PursuanttotheMeasuresonReportingofForeignInvest-mentInformationissuedbyMOFCOM,FIEsarerequiredtosubmitinformationoftheiractualcontrollersthroughtheenterpriseregistrationsysteminthefollowingreports:

?initialreportatthetimeofestablishment;

?changereportsatthetimeofchangingregis-tration(asapplicable);and

?annualreportsfortheprecedingyearthroughtheNationalEnterpriseCreditInformation

PublicitySystembetween1Januaryand30Juneofeachyear.

4.LegalDevelopments

4.1SignificantRecentDecisionsorRegulatoryDevelopments

Afewnotablelegalandregulatorydevelopmentsinthepastthreeyearsaresetoutbelow.

TheCompanyLawisbeingamended,proposednewrulesstrengthenshareholdercommitments,allowingequitytransferwithmoreflexibility,andimprovingcorporategovernance.

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TheFILcameintoforceon1January2020,overhaulingtheoldFDIregulatoryregimecon-stitutedprimarilybytheWhollyForeign-OwnedEnterpriseLaw,theSino-ForeignEquityJointVentureEnterpriseLawandtheSino-ForeignCo-operativeJointVentureEnterpriseLaw.Inadditiontothechangesonstructuresexplainedin2.1JVVehicles,theNegativeListforForeignInvestmentisintroducedsuchthatonlyforeigninvestmentincertainsensitiveorcriticalsectors(31intotal)onthelistaresubjecttosubstantivereview.

TheAnti-MonopolyLawwasamendedin2022introducingmajorchanges,whichinclude:

?establishmentofthe“safeharbour”regime;

?introductionofadiscretionary“stop-the-clock”mechanismformergerreviews;

?enhancedpenaltiesforviolations,including

raisingthemaximumfinesforviolationsfor

bothresponsiblecompaniesandindividualsandensuringtheviolationswillalsobeshownonacompany’screditrecord,whichispub-liclyavailable;

?prohibitingmonopolisticbehaviourthrough

newmethods,includingstrengtheningthe

oversightofM&Aactivitiesinthedigital

economyspace(inlinewiththeglobaltrend);

?establishingafaircompetitionreviewmecha-nism.

Inresponsetothegeopoliticaldevelopmentsoverthelastfewyears,Chinahastightenedscrutinyonissuesofperceivednationalsecurity:

?theNSRMeasureswereimplementedin

December2020,authorisingtheregulatory

authorities(eg,theNDRC,MOFCOMandtheSAMR)toreviewandapproveforeigninvest-mentsthatmaypotentiallyimpactnational

security;

?theMeasuresforCybersecurityReviewandMeasuresforSecurityAssessmentofCross-BorderDataTransferwereimplementedto

enhancetheprotectionofcriticalinformationinfrastructureandsafeguardagainstcyber

threats;and

?theCounter-EspionageLawcameintoeffecton1July2023,reinforcingtheeffortsoftheChinesegovernmenttosafeguarddataandinformationsecurityingeneralandthatrelat-ingtonationalsecurityinparticular.

5.NegotiatingtheTerms

5.1NegotiationDocumentation

Thetypical